What happens if you are a limited company or a sole trader and.....

...you get sued!

Was asked a question a few weeks ago by a consultant.

The question was:

“What happens if I make a mistake and I get sued by a company?”

I then asked: “Are you a limited company?”

They responded: “No”

I then had to explain that, potentially, they have put their personal assets at risk as by not having a limited company they are holding themselves personally responsible.

“Ah…” they said.

I then explained that he could protect himself and his personal assets by ensuring appropriate professional indemnity insurance was in place. They could also incorporate and set up a limited company as a further measure of protecting personal assets but this could have positive or negative tax implications, depending on the circumstances.

Moral of the story. Make only 1 mistake if you can. Don’t make another mistake by not having insurance to cover your first mistake!!!